Romney's disclosure loophole

4/5/12 2:56 PM EDT

Republican presidential front-runner Mitt Romney, whose wealth has become a central issue in the 2012 campaign, has taken advantage of an obscure exception in federal ethics laws to avoid disclosing the nature and extent of his holdings.

By offering a limited description of his assets, Romney has made it difficult to know precisely where his money is invested, whether it is offshore or in controversial companies, or whether those holdings could affect his policies or present any conflicts of interest.

In 48 accounts from Bain Capital, the private equity firm he founded in Boston, Romney declined on his financial disclosure forms to identify the underlying assets, including his holdings in a company that moved U.S. jobs to China and a California firm once owned by Bain that filed for bankruptcy years ago and laid off more than 1,000 workers.

Those are known only because Bain publicly disclosed them in government filings and on the Internet. But most of the underlying assets — the specific investments of Bain funds — are not known because Romney is covered by a confidentiality agreement with the company.

Several of Romney’s assets — including a large family trust valued at roughly $100 million, nine overseas holdings and 12 partnership interests— were not named initially on his disclosure forms, emerging months later when he agreed to release his tax returns.

There is no indication that Romney is violating any rules, and his advisers note that his reports have been certified by the Office of Government Ethics, which reviews the disclosures required of presidential candidates.

Romney spokeswoman Andrea Saul said the disclosure “completely and accurately describes Gov. Romney’s assets as required by the law.” She said Romney does not know the details of his investments since he turned them over to a trustee to manage, and that ethics officials confirmed that “everything ... was reported correctly” and completely.

Several outside experts across the political spectrum, however, say Romney’s disclosure is the most opaque they have encountered, with some suggesting the filing effectively defeats the spirit of disclosure requirements.

“His approach turns the whole purpose of the ethics statute on its ear,” said Cleta Mitchell, a Republican lawyer who has represented dozens of candidates and officials in the disclosure process, including Romney’s leading challenger for the GOP nomination, Rick Santorum...

...Like all nominees for federal office, Romney is covered by the statute that mandates disclosure of assets. But since the 2004 campaign — when Democratic presidential candidate John Kerry declined to disclose some of his wife’s holdings — the Office of Government Ethics has permitted nominees and presidential candidates to postpone revealing underlying assets in investment accounts that have a legally binding confidentiality agreement.

The idea is that those assets would be sold if the candidate is elected, to avoid any conflicts. But, as Hamburger notes, what is unusual here is the scope of what is kept confidential in Romney's case, because Bain holdings comprise most of his assets:

Romney does disclose underlying assets in his accounts held by financial firms other than Bain, such as Goldman Sachs. But his advisers say Bain holdings, the source of most of his wealth, are kept confidential at the request of Bain management for proprietary business reasons. Romney’s attorneys asked Bain officials to release information about the funds, but the request was denied, according to Saul.

It's not that Romney is doing anything out of compliance. But at a minimum a presidential candidate with such personal wealth, who has a legitimate shot at the presidency, is testing the bounds of the disclosure laws — and providing another reason why Bain is a fat target for Democrats.